Income & Spending

By IBT Staff Reporter On 01/31/08 AT 9:35 AM

Consumer spending is at very low levels rising in December a modest 0.2% which marks the slowest pace in six months, and well below NovemberÃ¢â‚¬â„¢s gain of 1 percent. Income though for the same period gained above expectations with 0.5% yet with increasing obligations of higher oil prices and tightened mortgage payments the public is spending much less.

The is adding to the damage the economy is already battling from, and when consumers spend less meaning while they have income, then they are fearing spending now for what to come, they are barely making it through, and then new employment is slowing thereby adding to cash limitations.

The ECI is still stable at 0.8% as the gauge of rising prices pressers from employers that they are welling to give to their working force means itÃ¢â‚¬â„¢s to be finally reflected in the headline figures. Inflation is now the last thing on mind of Mr. Bernanke and his crew as they see it to moderate by falling growth and obviously if people are not spending then one threat is crossed of the list.

The PCE on the core level which the fed examines thoroughly stayed steady in December at the same pace of growth seen in the previous month of two tenth of a percent on the month and 2.2% on the year.

As we said after a sluggish 0.6% growth in the fourth quarter which is the least of the worries as the economy is to reflect further weakness in the first three months of this year. The Feds were quite clear in their statement last night accompanying their decision Ã¢â‚¬Å“downside risksÃ¢â‚¬Â to growth are appreciating as the labor market their pride and joy, that once was sought to be the savior is now expressed to be slowing. TomorrowÃ¢â‚¬â„¢s jobs jamboree will be the final K.O while today the last weekÃ¢â‚¬â„¢s claims for unemployment benefits inclined above expectations to 375 thousand from 301 thousand the prior week.

The housing breakdown in the US has officially spread and is contagious and mainly till now we canÃ¢â‚¬â„¢t say that any is safe from the plague. The Fed provided the official antidote in dosages of basis points yet more is needed to survive as the economy is on its death bed taking those last gasps of air, and counting the daysÃ¢â‚¬Â¦